A Study On The Motivation And Economic Consequences Of High Cash Payouts In Company F

Dividend distribution is the distribution of annual net profit among the owners of a company.What kind of dividend distribution is reasonable? What are the necessary prerequisites for the introduction of a high cash payout? And what are the effects? These are difficult questions for many managers of listed companies.Against the background of the overall low level of cash payout in China’s A-share market,this paper selects Company F,a representative enterprise in the auto parts industry,as a case study to analyse the motivation for its continuous high cash payout over the years,and to explore the economic consequences of its high cash payout policy from three perspectives,including corporate value,market response and financial performance.It is of strong practical significance to promote the high-quality development of listed enterprises.Firstly,this paper introduces the background and significance of the study,the current situation of domestic and international research,the content and methodology of the study,and explains the relevant concepts and theoretical foundations.Secondly,the basic situation of Company F is described,and the characteristics of dividend distribution of Company F in the past ten years are analysed,and a comparison with comparable companies and industry averages is made.Again,the motivation for Company F’s high dividend payout policy is explored,and it is found that the main reasons are the company’s strong economic strength,lack of investment opportunities and the need to satisfy the interests of major shareholders.Then,a comprehensive analysis of the economic consequences of Company F’s high cash dividend policy was carried out.The results show that,in terms of corporate value,the high cash payout did not bring the company better development prospects;in terms of short-term market performance,the high cash payout did not cause a significant increase in the company’s share price and did not make the company generate more income;in terms of long-term market response,the continued high cash payout sent a signal to the market that Company F was doing well,indicating the company’s economic strength,which helped the company establish a good social In terms of financial performance,the implementation of high cash payouts has caused a large cash outflow from the company,resulting in the need for the company to seek external investment and a decrease in solvency,as cash payouts have taken up funds needed for the company’s daily operations,reducing its operating capacity and not fully considering external investment opportunities,affecting its growth capacity.Finally,there are conclusions and recommendations.The case study concludes that high cash payout has two sides,namely,the implementation of high cash dividend policy must be supported by a certain degree of economic strength,which can increase the company’s financial risk and raise the cost of capital while increasing the company’s popularity.This leads to the following suggestions for optimisation: firstly,dividend distribution should be tailored to the actual situation of the company;secondly,make full use of surplus funds,strengthen foreign investment and improve the return on investment;thirdly,establish a monitoring mechanism and strengthen corporate governance;fourthly,fully exploit its own advantages and enhance corporate profitability.This paper can enrich the case studies of dividend policies of listed companies,and also provide reference and guidance for other listed companies to reasonably formulate dividend policies,and also help regulators to improve the effectiveness of supervision.